Cyprus Mail

Discussions to change ways of mediating loan restructuring

Financial ombudsman Pavlos Ioannou

By George Psyllides

The House Finance Committee is looking to shift the authority of deciding whether the banks implement the Central Bank code of conduct on loan restructuring from the mediators to their superior, the financial ombudsman, it emerged on Monday.

The issue came up during discussion of a government bill that abolishes the authority of the mediator to ensure satisfactory implementation of the code of conduct by the banks since it was not part of the mediation procedure.

The absolute authority for that lies with the Central Bank.

Parliament however, opposes the move and decided instead to put it in the hands of financial ombudsman Pavlos Ioannou, their boss, who was asked to submit a suggestion to that end.

Ioannou asked for the authority, telling the committee that not all mediators have the technical knowhow.

Committee chairman Nicolas Papadopoulos told reporters later that they have asked Ioannou to recommend an amendment so that when a mediator sees a possible violation, they should lodge a complaint with the ombudsman who will decide.

This would not take away any of the Central Bank’s powers, which also include sanctions in the event a bank is found in violation.

“The ombudsman will not have the authority to impose any sanctions but we think his review … would be a protection measure for borrowers because there will be an additional check, even without sanctions,” Papadopoulos said.

He added that the ombudsman’s ruling alone would act as a deterrent for banks.

The committee heard that so far the ombudsman’s office has received 42 mediation applications concerning loans worth €8 million.

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